The increase in the Central Bank rate had little effect on the Moscow Exchange index

The sharp rise in the key rate had little effect on the stock market. The index of the Moscow Exchange on the basis of trading on Tuesday fell by only 0.5%, remaining above the level of 3100 points. The market was supported by securities of oil companies, which benefited from the continued high dollar exchange rate and high oil prices, as well as shares of the exchange itself due to expectations of growth in net interest income. Experts are set to recover the market against the backdrop of neutral geopolitics and expectations of interim dividend payments by large issuers.

Tightening of the monetary policy of the Bank of Russia in the form of a sharp rise in the key rate (from 8.5% to 12%) had little effect on the Moscow Exchange index. The main stock indicator lost a symbolic 0.5%, having rolled back to the level of 3115.25 points. The index showed a significant decrease (by 2%) at the beginning of trading, amid expectations of tough actions by the Central Bank. However, the reality was less dramatic. “Investors rushed about with euphoria due to the recovery of the dollar to frustration after the announcement of additional measures to restrict the withdrawal of funds abroad and measures for the mandatory sale of foreign exchange earnings,” said Alexander Dorozhkin, head of the share management department of Ingosstrakh-Investments Management Company. At the same time, the volume of trading in shares of the index, although it turned out to be lower than the previous day, however, exceeded 100 billion rubles, which is significantly higher than the average value of this year.

In general, the market was supported primarily by oil companies, as well as issuers who benefited from rising interest rates. In particular, the shares of LUKOIL, Surgutneftegaz, Rosneft showed an increase of 1-2.5%. Shares of the Moscow Exchange rose by 4.7%. For oil and gas companies, the exchange rate of the ruble against the dollar is important, says Evgeny Kalyanov, an expert on the stock market at BCS Mir Investments. At the same time, the sharp increase in the key rate had a short-term effect on the dollar. At the beginning of the trading session, the rate fell to 92 rubles/$, but already at the main session it confidently kept above 98 rubles/$, rising to 99 rubles/$. At the same time, since the beginning of August, the dollar has already grown by 10%, and since the beginning of the year – by almost 40%. Given the persistence of high oil prices – according to the Ministry of Finance, the average price of Urals oil from July 15 to August 14 exceeded $ 70 per barrel – this supports the shares of oil companies.

In addition, the decision of the Central Bank is favorable for the Moscow Exchange. The growth of ruble rates will support the net interest income of the trading floor, taking into account the estimated high share of interest income on balances in rubles, explains Mr. Kalyanov. In particular, at the end of 2022, net interest income amounted to 55% of its revenue. Among the outsiders of the market were the securities of developers – companies PIK, LSR, Ingrad. The reason for the decline in their quotes is the expectation of an increase in mortgage rates, which may negatively affect the sales of companies in the sector, says Sergey Suverov, a strategist at Arikacapital.

In the second half of August, the dynamics of the Russian stock market will largely continue to be determined by the geopolitical background and the dynamics of the currency ruble. The movement of the key rate has a limited and short-term impact on the stock market, says independent financial analyst Andrei Barkhota. In the medium term, all expectations are tied to geopolitics, and without shocks, after a slight correction, a new round of growth may take place against the backdrop of a possible start of monetary policy easing, Dmitry Alexandrov, head of the analytical research department at IVA Partners Investment Company, believes.

The growth of ruble liquidity may warm up the level of its utilization on the stock market, and the Moscow Exchange index may exceed the level of 3250 points by the end of August, Mr. Barkhota believes. With geopolitics neutrality, new purchases of shares can be expected, including in the hope of paying interim dividends for the first half of 2023, Elena Kozhukhova, an analyst at Veles Capital, predicts. According to her, payments can be expected from Gazprom, PhosAgro, NOVATEK, ALROSA, Samolet, Severstal and Segezha. This, she said, could lead to the return of the Moscow Exchange index above 3200 points.

Ksenia Kulikova